Gannett CEO To Employees: Relax

Those darned bloggers and all the trouble they cause!

McLean's Gannett Co., the nation's biggest newspaper chain, caused a stir in the blogosphere when it dropped this little gem into an Securities and Exchange Commission filing on Wednesday, in a section about overhauling employee compensation plans:

"The plans and agreements were also amended, among other things, to clarify the definition of change in control by specifying the ownership level at which employees would not be deemed to be participating in a management buyout."

Management buyout? WHAT?

The paragraph, which reads like boilerplate, sent sharp-eyed and deal-weary RWCNB (Reporters Who Cover Newspaper Buyouts) into a tizzy: After last year's dissolution of the venerable Knight Ridder chain, this year's sale of Tribune Co. to real estate mogul Sam Zell and the days-old acquisition of the Wall Street Journal by Rupert Murdoch, was Gannet next?

RWCNB remembered: Dow Jones & Co. restructured its compensation earlier this summer when it became clear that Murdoch's bid was gaining steam as a way to ensure management stability through a transition.

And like Dow Jones and the entire newspaper sector, Gannett stock has declined over the past two years, down from about $75 per share in mid-2005 to less than $50 per share now. A value investor, like a Murdoch, looks at such a drop and may see a bargain. Gannett has the nation's largest newspaper -- USA Today -- and 84 smaller papers that provide steady cash flow.

But the math here different.

Dow Jones was valued at only $3 billion before Murdoch's bid, which pumped its value up to $5 billion, which was still less than the amount of cash his News Corporation has in the bank.

Gannett is valued at more than $11 billion. That would take some really deep pockets. And selling off a company in pieces can cause huge tax headaches.

So we e-mailed Gannett spokeswoman Tara Connell on Thursday, asking what was up.

She replied: "The amendments are routine, to bring us into line with current trends and compliance with IRS rule and [regulation] changes. Again, routine."

Apparently, none of the other RWCNB did the same, because today, Gannett chief executive Craig Dubow hauled out the big fire hose to drown this sparking tinderbox:

"I want to put an end to the unwarranted speculation generated by a few bloggers this week. A change in control of Gannett is not in the works or even anticipated," he wrote in a memo to employees.

Dubow wrote that Gannett's "change of control" plan has been in effect since 1990 and is amended, as in the most recent SEC filing, regularly. The sale speculation is the result of a "handful of bloggers" who speculated wildly without bothering to call or e-mail Gannett, he said.

"So, stand down," Dubow wrote. "Relax."

Here is the full text of Dubow's memo:

"Dear co-workers:

I want to put an end to the unwarranted speculation generated by a few bloggers this week. A change in control of Gannett is not in the works or even anticipated.

This handful of bloggers made some incorrect assumptions about information in our quarterly filing with the Securities and Exchange Commission. None of the bloggers called and checked with us before speculating that we were preparing for a sale. We are not.

What we were doing is making routine amendments to our bylaws and compensation plans. Many of these revisions were mandated by newly adopted IRS rules about deferred compensation.

The word 'amendment' is important here. We updated plans that already were in effect. Actually, our plan for dealing with a change of control has been in place since 1990. It's been amended on occasion before and reported on over the years.

So, stand down. Relax. Gannett -- along with the media industry -- is facing some tough times but we are actively and aggressively moving forward with our strategic plan. We are seeing success and creating more of it everyday.

Come fall, we will have some interesting new approaches to innovation to tell you about. And there are lots of good things happening throughout the company, even though it may feel like a rough ride at the moment.

As you know, I am very proud of you and all you are doing to make this transformation happen. Gannett needs you, and appreciates you.